Public Authorities and Public Corporations

A public authority or public corporation is a quasi-governmental agency created by the legislature and given corporate status to achieve a special purpose (such as building toll roads or operating a local hospital) with powers and exemptions not enjoyed by regular government agencies. Generally, the two terms are synonymous, except that there are some public corporations (for example, the Georgia Lottery Corporation) that are not classified as authorities. Both authorities and corporations are created by law and given corporate powers to pursue a public purpose. Legally, however, they are considered instruments of government—but not official agencies.

Public authorities and corporations became popular during the Great Depression, when, most notably, the Tennessee Valley Authority was established. Authorities came into use in Georgia as a means of circumventing a constitutional provision in effect from 1877 to 1972 that essentially prohibited the state government from borrowing money. Because of this ban and a constitutional prohibition of multiyear contracts to finance projects, it was difficult, if not impossible, in Georgia to fund major capital improvements in a single fiscal year. In 1939 the General Assembly created the State Hospital Authority to circumvent the ban. The authority was allowed to borrow money by issuing revenue bonds in its own name, then leasing facilities it built back to the state at a rental rate that would allow it to repay the debt principal and interest. The Supreme Court of Georgia later upheld this practice, ruling that such debt was a legal responsibility of the authority—and not the state.

Subsequently, other state authorities were created to finance construction of schools, universities, highways, bridges, government buildings, ports, and other public facilities. In some cases, the authority was not only a funding mechanism but also the governing body of a public enterprise (such as Stone Mountain Park, the World Congress Center, and the state port facilities in Savannah and Brunswick). Each authority's powers were prescribed in the statute creating it, which also provided for a governing board of ex officio or appointive members.

In 1972 the Georgia constitution was amended to allow the issuance of state debt through the new Georgia State Financing and Investment Commission. Because some existing authority debt is still unpaid, most state authorities have continued in existence—and indeed several new ones (such as the Georgia Technology Authority) with operating responsibilities have been created.

The most prevalent form of public authority in Georgia is that created to serve local needs. Most often, local authorities are created to fund and operate city or county projects, such as public housing, mass transportation, hospitals, and other special enterprises. Local development authorities are also commonly created to attract business and industry to a community or to promote downtown development and revitalization.

The primary arguments for public authorities and corporations are that their special powers and exemptions allow them more flexibility to operate like a business, and that they can concentrate their attention on a single function. Local authorities also allow public services (such as water, mass transit, or hospitals) to be provided across city or county boundaries. The major criticisms of both state and local authorities center on the growing proliferation of these special-purpose governments and the fact that they are governed by appointive or ex officio board members not directly accountable to the voters. As a result, authorities tend to operate with more independence than ordinary government agencies.